Malaysia
is a federation of 13 states in Southeast Asia, formed in 1963. The
country consists of two geographical regions divided by the South China
Sea:

Peninsular
Malaysia (or West Malaysia) on the Malay Peninsula shares a land
border on the north with Thailand and is connected by the Johor-Singapore
Causeway and the Malaysia-Singapore Second Link to the south with
Singapore. It consists of the 9 sultanate states of Johor, Kedah,
Kelantan, Negeri Sembilan, Pahang, Perak, Perlis, Selangor and
Terengganu, two states with a governor namely Malacca and Penang,
and the two federal territories of Putrajaya and Kuala Lumpur.

Malaysian
Borneo (or East Malaysia) occupies the northern part of the island
of Borneo, bordering Indonesia and surrounding the Sultanate of
Brunei. It consists of the states of Sabah and Sarawak and the
federal territory of Labuan island.

Map
of Peninsular and East Malaysia

As
states of Malaysia were formerly British colonies, many Malaysian
institutions are based on those of the British. For instance, the
Malaysian system of government draws heavily on the British Westminster
system. The head of state is the Yang di-Pertuan Agong (colloquially
referred to as the King), who is elected from among the state sultans to
a five-year term, making Malaysia one of two elective monarchies in the
world (the other is Vatican City).

As
a constitutional monarchy, executive power is vested in the Prime
Minister, with the King serving as more of a figurehead. The legislative
branch consists of Parliament, which is mostly based on the British
Parliament. A judiciary has also been established under the
Constitution. The Barisan Nasional (National Front), a coalition of
several political parties, has ruled Malaysia since Malaya's
independence in 1957.

Initially
heavily dependent on agricultural and mining activities, the Malaysian
economy has since shifted its focus to manufacturing and tourism as its
major sources of income. Despite the shift, Malaysia remains one of the
top producers of rubber and palm oil. In the 1970s, the government
implemented the controversial New Economic Policy (NEP) to address an
income disparity between the Malays and Chinese.

Although
historically dominated by the Malays, modern Malaysian society is
heterogeneous, with substantial Chinese and Indian minorities. Malaysian
politics have been noted for their allegedly communal nature; the three
major component parties of the Barisan Nasional each restrict membership
to those of one ethnic group, and the only major violence the country
has seen since independence was the May 13 Incident of racial rioting in
the wake of an election campaign based on racial issues.

The
name of the Federation

Article
1(1) of the Federal Constitution states that "The federation shall
be known, in Malay and English, as Malaysia". The name "Federation
of Malaysia" therefore has no official sanction.

The
name Malaysia was adopted in 1963 when Singapore, Sabah and Sarawak
joined the Federation of Malaya to form Malaysia. Prior to 1963, the
Federation of Malaya was known as Persekutuan Tanah Melayu in
Malay, and the official names were therefore different in the two
languages.

History

The
Malay Peninsula has long benefited from its central position in the
maritime trade routes between China and the Middle East. Ptolemy showed
it on his early map with a label that translates as "Golden
Chersonese", the Straits of Malacca as "Sinus Sabaricus".

The
earliest recorded Malay kingdoms grew from coastal city-ports
established in the 10th century AD. These include Langkasuka and Lembah
Bujang in Kedah, as well as Beruas and Gangga Negara in Perak and Pan
Pan in Kelantan. It is thought that originally these were Hindu or
Buddhist nations. The first evidence of Islam in the Malay peninsula
dates from the 14th century in Terengganu, but according to the Kedah
Annals, the 9th Maharaja Derbar Raja (1136-1179 AD) of Sultanate of
Kedah converted to Islam and changed his name to Sultan Muzaffar Shah.
Since then there have been 27 Sultans who ruled Kedah.

There
were numerous Malay kingdoms in the 2nd and 3rd century A.D., as many as
30 according to Chinese sources. Kedah – known as Kedaram or Kataha,
in ancient Pallava or Sanskrit – was in the direct route of invasions
of Indian traders and kings. Rajendra Chola, who is now thought to have
laid Kota Gelanggi to waste, put Kedah to heel in 1025 but his
successor, Vir Rajendra Chola, had to put down a Kedah rebellion to
overthrow the invaders.

The
Buddhist kingdom of Ligor took control of Kedah shortly after, and its
King Chandrabhanu used it as a base to attack Sri Lanka in the 11the
century, an event noted in a stone inscription in Nagapattinum in Tamil
Nadu and in the Sri Lankan epic, Mahavamsa. During the first millennium,
the people of the Malay peninsula adopted Hinduism and Buddhism and the
use of the Sanskrit language until they were eventually converted to
Islam, but not before Hinduism, Buddhism and Sanskrit became embedded
into the Malay worldview.

We
can still see traces of this in political ideas, social structure,
rituals, language, arts and cultural practices. To this day, when a
Malay considers anything important, he looks for a Sanskrit word to
describe it: It is the Sanskrit pradana mantri (the Malay perdana mentri)
here while in another Malay land, it is Penghulu ng Pilipina for its
president. The Proton
car model names are from Sanskrit whilst the Perodua resorts to Malay
names.

There
are reports of other areas older than Kedah – the ancient kingdom of
Ganganegara, around Bruas in Perak, for instance – that pushes
Malaysian history even further into antiquity. If that is not enough, a
Tamil poem, Pattinapillai, of the second century A.D., describes goods
from Kadaram heaped in the broad streets of the Chola capital; a seventh
century Sanskrit drama, Kaumudhimahotsva, refers to Kedah as
Kataha-nagari. The Agnipurana also mentions a territory known
Anda-Kataha with one of its boundaries delineated by a peak, which
scholars believe is Gunong Jerai. Stories from the Katasaritasagaram
describe the life of elegance of life in Kataha.

All
this is revealed after earlier archaeological and historical inquiry.
Kota Gelanggi does not, it would appear, reveal more than the details of
that long India, Hindu, Buddhist, Chola presence, the fitting of a
historical jig-saw of a land that has a rich and enviable history long
before the advent of Islam. We have been constrained by a mental block
of not wanting to look beyond the Sejarah Melayu for our historical
past. Malaysia's first prime minister, and a scion of the Kedah royal
family, wanted independent Malaya to be know as Langkasuka, a kingdom
that a millennium ago dominated north Malaya and southern Thailand, but
he gave up the idea when he discovered that its capital was in Thailand.
And the present contretemps between Malaysia and Thailand over the
southern Thai Malays is also caught in this cultural time-warp.

In
the early 15th century, the Sultanate of Malacca was established under a
dynasty founded by Parameswara, a prince from Palembang, who fled from
the island Temasek (now Singapore). Parameswara decided to establish his
kingdom in Malacca after witnessing an astonishing incident where a
white mouse deer kicked one of his hunting dogs. With Malacca as its
capital, the sultanate controlled the areas which are now Peninsula
Malaysia, southern Thailand (Patani), and the eastern coast of Sumatra.
It existed for more than a century, and within that time period Islam
spread to most of the Malay Archipelago. Malacca was the foremost
trading port at the time in Southeast Asia.

Kuala
Lumpur, capital city of Malaysia

In
1511, Malacca was conquered by Portugal, which established a colony
there. The sons of the last sultan of Malacca established two sultanates
elsewhere in the peninsula - the Sultanate of Perak to the north, and
the Sultanate of Johor (originally a continuation of the old Malacca
sultanate) to the south. After the fall of Malacca, three nations
struggled for the control of Malacca Strait: the Portuguese (in
Malacca), the Sultanate of Johor, and the Sultanate of Aceh. This
conflict went on till 1641, when the Dutch (allied to the Sultanate of
Johor) gained control of Malacca.

Britain
established its first colony in the Malay peninsula in 1786, with the
granting of the island of Penang to the British East India Company by
the Sultan of Kedah. In 1824, the British took control of Malacca
following the Anglo-Dutch Treaty of 1824 which divided the Malaya
archipelago between Britain and the Netherlands, with Malaya in the
British zone. In 1826, Britain established the crown colony of the
Straits Settlements, uniting its three possessions in Malaya: Penang,
Malacca and Singapore. The Straits Settlements were administered under
the East India Company in Calcutta until 1867, when they were
transferred to the Colonial Office in London.

During
the late 19th century, many Malay states decided to obtain British help
in settling their internal conflicts. The commercial importance of tin
mining in the Malay states to merchants in the Straits Settlements led
to British government intervention in the tin-producing states in the
Malay Peninsula. British gunboat diplomacy was employed to bring about a
peaceful resolution to civil disturbances caused by Chinese gangsters,
and the Pangkor Treaty of 1874 paved the way for the expansion of
British influence in Malaya. By the turn of the 20th century the states
of Pahang, Selangor, Perak, and Negeri Sembilan, known together as the
Federated Malay States (not to be confused with the Federation of
Malaya), were under the de facto control of British Residents
appointed to advise the Malay rulers. The British were
"advisers" by name but in reality they were the puppet masters
behind the Malay rulers.

The
remaining five states in the peninsula, known as the Unfederated Malay
States, while not directly under rule from London, also accepted British
advisors around the turn of the 20th century. Of these, the four
northern states of Perlis, Kedah, Kelantan and Terengganu had previously
been under Siamese control.

On
the island of Borneo, Sabah was governed as the crown colony of British
North Borneo, while Sarawak was acquired from Brunei as the personal
kingdom of the Brooke family, who ruled as white rajahs. As part of its
history, the Sultanate of Sulu was granted the territory as a prize for
helping the Sultan of Brunei against his enemies, and from then on that
part of Borneo is recognized as part of the Sultan of Sulu's
sovereignty. In 1878, Baron Von Overbeck, an Austrian partner
representing The British North Borneo Co. and his partner British Alfred
Dent, leased the territory known as "Sabah" - roughly
translated as "the land beneath the winds". In return the
company will provide arms to the Sultan to resist the Spaniards and
5,000 Malaysian ringgits annual rental based on the Mexican dollars
value at that time or its equivalent in gold. This lease have been
continued until the independence and formation of the Malaysian
federation in 1963 together with Singapore, Sarawak and Malaysia. Up to
these days, the Malaysians have been continuing the rental payment of
5,300 Malaysian Ringgit - a 300 Ringgit increased from original rent.

Following
the Japanese occupation of Malaya (1942-1945) during World
War II, popular support for independence grew. Post-war British
plans to unite the administration of Malaya under a single crown colony
called the Malayan Union foundered on strong opposition from the Malays,
who opposed the emasculation of the Malay rulers and the granting of
citizenship to the ethnic Chinese. The Malayan Union, established in
1946 and consisting of all the British possessions in Malaya with the
exception of Singapore, was dissolved in 1948 and replaced by the
Federation of Malaya, which restored the autonomy of the rulers of the
Malay states under British protection.

During
this time, rebels under the leadership of the Communist Party of Malaya
launched guerrilla operations designed to force the British out of
Malaya. The Malayan Emergency, as it was known, lasted from 1948 to
1960, and involved a long anti-insurgency campaign by Commonwealth
troops in Malaya. Against this backdrop, independence for the Federation
within the Commonwealth was granted on 31 August 1957.

In
1963 the Federation was expanded with the admission of the then-British
crown colonies of Singapore, Sabah (British North Borneo) and Sarawak,
and renamed Malaysia. The Sultanate of Brunei, though initially
expressing interest in joining the Federation, withdrew from the planned
merger due to opposition from certain segments of the population as well
as arguments over the payment of oil royalties.

The
early years of independence were marred by conflict with Indonesia (Konfrontasi)
over the formation of Malaysia, Singapore's eventual exit in 1965, and
racial strife in the form of racial riots in 1969 (popularly known as
the "May 13" riots). The Philippines also made an active claim
on Sabah in that period based upon the Sultanate of Brunei's cession of
its north-east territories to the Sultanate of Sulu in 1704. The claim
is still ongoing.

After
the May 13 racial riots of 1969, the controversial New Economic Policy -
intended to increase the share of the economic pie owned by the
bumiputeras as opposed to other ethnic groups - was launched by Prime
Minister Tun Abdul Razak. Malaysia has since maintained a delicate
ethno-political balance, with a system of government that has attempted
to combine overall economic development with political and economic
policies that favour Bumiputras, which includes the majority Malays, but
not always the indigenous population.

Between
the 1980s and the early 1990s, Malaysia experienced significant economic
growth under the premiership of Tun Dr Mahathir bin Mohamad. The period
saw a shift from an agriculture-based economy to one based on
manufacturing and industry in areas such as computers and consumer
electronics. It was during this period, too, that the physical landscape
of Malaysia has changed with the emergence of numerous mega-projects.
The most notable of these projects are the Petronas Twin Towers (at the
time the tallest building in the world), KL International Airport (KLIA),
the Sepang F1 Circuit, the Multimedia Super Corridor (MSC), the Bakun
hydroelectric dam and Putrajaya, a new federal administrative capital.

In
the late 1990s, Malaysia was shaken by the Asian financial crisis as
well as political unrest caused by the sacking of the deputy prime
minister Dato' Seri Anwar Ibrahim. In 2003, Dr Mahathir, Malaysia's
longest serving prime minister, retired in favour of his deputy,
Abdullah Ahmad Badawi, commonly known as Pak Lah.

Kuala
Lumpur's landmark, the Petronas Twin Towers

The
tallest twin towers in the world

Politics

Malaysia
is a federal constitutional elective monarchy. It is nominally headed by
the Paramount Ruler or Yang di-Pertuan Agong, commonly referred
to as the King of Malaysia. Yang di-Pertuan Agong are selected for
five-year terms from among the nine Sultans of the Malay states; the
other four states, which have titular Governors, do not participate in
the selection.

The
system of government in Malaysia is closely modeled on that of
Westminster parliamentary system, a legacy of British colonial rule. In
practice however, more power is vested in the executive branch of
government than in the legislative, and the judiciary has been weakened
by sustained attacks by the government during the Mahathir era. Parliamentary
elections are held at least once every five years, with the last general
election being in March 2004. Since independence in 1957, Malaysia has
been governed by a multi-racial coalition known as the Barisan Nasional
(formerly the Alliance).

Executive
power is vested in the cabinet led by the prime minister; the Malaysian
constitution stipulates that the prime minister must be a member of the
lower house of parliament
who, in the opinion of the Yang di-Pertuan Agong, commands a majority in
parliament. The cabinet is chosen from among members of both houses of
Parliament and is responsible to that body.

The
bicameral parliament consists of the upper house, the Senate or Dewan
Negara (literally the "Chamber of the Nation") and the
lower house, the House of Representatives or Dewan Rakyat
(literally the "Chamber of the People"). All 69 Senators sit
for 6-year terms; 26 are elected by the 13 state assemblies, and 43 are
appointed by the king. The 219 members of the House of Representatives
are elected from single-member constituencies by universal adult
suffrage, for a maximum term of 5 years. Legislative power is divided
between federal and state legislatures.

The
state governments are led by chief ministers (Menteri Besar or Ketua
Menteri, the latter term being used in states without hereditary
rulers), selected by the state assemblies (Dewan Undangan Negeri)
advising their respective sultans or governors.

The
national media are largely controlled by the government and by political
parties in the Barisan Nasional/National Front ruling coalition and the
opposition has little access to the media. The print media are
controlled by the Government through the requirement of obtaining annual
publication licences under the Printing and Presses Act.

Geography

The
two distinct parts of Malaysia, separated from each other by the South
China Sea, share a largely similar landscape in that both West and East
Malaysia feature coastal plains rising to often densely forested hills
and mountains, the highest of which is Mount Kinabalu at 4,095.2 metres
(13,435.7 ft) on the island of Borneo. The local climate is
equatorial and characterised by the annual southwest (April to October)
and northeast (October to February) monsoons.

Tanjung
Piai, located in the southern state of Johor, is the southernmost tip of
continental Asia - if Singapore, an island connected to the continent by
a man-made causeway, is excluded.

The
Strait of Malacca, lying between Sumatra and West Malaysia, is arguably
the most important shipping lane in the world.

Putrajaya
is the newly created administrative capital for the federal government
of Malaysia, aimed in part to ease growing congestion within Malaysia's
capital city, Kuala Lumpur. The prime minister's office moved in 1999
and the move is expected to be completed in 2005. Kuala Lumpur remains
the seat of parliament, as well as the commercial and financial capital
of the country. Other major cities include George Town, Ipoh, Johor
Bahru, Kuching, Alor Star and Petaling Jaya.

World
location map South China sea and Malaysia

Economy

The
Malay Peninsula and indeed Southeast Asia has been a centre of trade for
centuries. Various items such as porcelain and spice were actively
traded even before Malacca and Singapore rose to prominence.

In
the 17th century, large deposits of tin were found in several Malay
states. Later, as the British started to take over as administrators of
Malaya, rubber and palm oil trees were introduced for commercial
purposes. Over time, Malaya became the world's largest major producer of
tin, rubber, and palm oil. These three commodities, along with other raw
materials, firmly set Malaysia's economic tempo well into the mid-20th
century.

Instead
of relying on the local Malays as a source of labour, the British
brought in Chinese and Indians to work on the mines and plantations.
Although many of them returned to their respective home countries after
their agreed tenure ended, some remained in Malaysia and settled
permanently.

As
Malaya moved towards independence, the government began implementing
economic five-year plans, beginning with the First Malayan Five Year
Plan in 1955. Upon the establishment of Malaysia, the plans were
re-titled and renumbered, beginning with the First Malaysia Plan in
1965.

In
1970s, Malaysia began to imitate the footsteps of the original four
Asian Tigers and
committed itself to a transition from being reliant on mining and
agriculture to an economy that depends more on manufacturing. With
Japanese investment, heavy industries flourished and in a matter of
years, Malaysian exports became the country's primary growth engine.
Malaysia consistently achieved more than 7% GDP growth along with low
inflation in the 1980s and the 1990s.

During
the same period, the government tried to eradicate poverty with the
controversial New Economic Policy (NEP), in the wake of the May 13
Incident of racial rioting in 1969. Its main objective was the
elimination of the association of race with economic function, and the
first five-year plan to begin implementing the NEP was the Second
Malaysia Plan. The success or failure of the NEP is the subject of much
debate, although it was officially retired in 1990 and replaced by the
National Development Policy (NDP).

The
rapid economic boom led to a variety of supply problems, however. Labour
shortages soon resulted in an influx of millions of foreign workers,
many illegal. Cash-rich PLCs
and consortiums of banks eager to benefit from increased and rapid
development began large infrastructure projects. This all ended when the
Asian Financial Crisis hit in the fall of 1997, delivering massive shock
to Malaysia's economy.

As
characteristic of other countries affected by the crisis, there was
speculative short-selling of the Malaysian currency, the ringgit.
Foreign direct investment fell at an alarming rate and, as capital
flowed out of the country, the value of the ringgit dropped from MYR
2.50 per USD to, at one point, MYR 4.80 per USD. The Kuala Lumpur Stock
Exchange's composite index plummeted from approximately 1300 points
to nearly merely 400 points in a matter of weeks. After the sacking of
finance minister Anwar Ibrahim, a National Economic Action Council was
formed to deal with the monetary crisis. Bank Negara imposed capital
controls and pegged the Malaysian ringgit at 3.80 to a US dollar.
Malaysia refused economic aid packages from the International
Monetary Fund (IMF) and the World Bank, however, surprising many
analysts.

In
March 2005, the United Nations Conference on Trade and Development (UNCTAD)
published a paper on the sources and pace of Malaysia's recovery,
written by Jomo K.S. of the applied economics department, University of
Malaya, Kuala Lumpur. The paper concluded that the controls imposed by
Malaysia's government neither hurt nor helped recovery. The chief factor
was an increase in electronics components exports, which was caused by a
large increase in the demand for components in the United States, which
was caused, in turn, by a fear of the effects of the arrival of the year
2000 (Y2K) upon older computers and other digital devices.

However,
the post Y2K slump of 2001 did not affect Malaysia as much as other
countries. This may have been clearer evidence that there are other
causes and effects that can be more properly attributable for recovery.
One possibility is that the currency speculators had run out of finance
after failing in their attack on the Hong Kong dollar in August 1998 and
after the Russian ruble collapsed.

Regardless
of cause/effect claims, rejuvenation of the economy also coincided with
massive government spending and budget deficits in the years that
followed the crisis. Later, Malaysia enjoyed faster economic recovery
compared to its neighbours. In many ways, however, the country has yet
to recover to the levels of the pre-crisis era.

While
the pace of development today is not as rapid, it is seen to be more
sustainable. And, although the controls and economic housekeeping may
not have been the principal reason for recovery, there is no doubt that
the banking sector is more resilient to external shocks now. The current
account has also settled into a structural surplus providing a cushion
to capital flight. Asset prices are now a fraction of their pre-crisis
heights.

The
fixed exchange rate regime was abandoned in July 2005 in favour of
managed floating system within an hour of China's announcing of the same
move. In the same week, the ringgit strengthened a percent against
various major currencies and was expected to appreciate further. As of
December 2005, however, expectations of further appreciation were muted
as capital flight exceeded USD 10 billion.

In
September 2005, Sir Howard J. Davies, director of the London School of
Economics, at a meeting Kuala Lumpur, cautioned Malaysian officials that
if they want a flexible capital market, they will have to lift the ban
on short-selling put into effect during the crisis. On March 23 2006,
Malaysia removed the ban on short selling.

Natural
resources

Malaysia
is well-endowed with natural resources in areas such as agriculture,
forestry as well as minerals. In terms of agriculture, Malaysia is the
world's primary exporter of natural rubber and palm oil, which together
with saw logs and sawn timber, cocoa,
pepper, pineapple and tobacco dominate the growth of the sector. Palm
oil is also a major foreign exchange earner.

Regarding
forestry resources, it is noted that logging only began to make a
substantial contribution to the economy during the nineteenth century.
Today an estimated 59 percent of Malaysia remains forested. The rapid
expansion of the timber industry, particularly after the 1960s, has
brought about a serious erosion problem in the country's forest
resources. However, in line with the Government's commitment to protect
the environment and the ecological system, forestry resources are being
managed on a sustainable basis and accordingly the rate of tree felling
has been on the downtrend.

In
addition, substantial areas are being silviculturally treated and
reforestation of degraded forest land is also being carried out. The
Malaysian government provide plans for the enrichment of some 312.30
square kilometres (120.5 sq mi) of land with rattan under
natural forest conditions and in rubber plantations as an intercrop. To
further enrich forest resources, fast-growing timber species such as meranti
tembaga, merawan and sesenduk are also being planted.
At the same time, the cultivation of high-value trees like teak and
other trees for pulp and paper are also encouraged. Rubber, once the
mainstay of the Malaysian economy, has been largely replaced by oil palm
as Malaysia's leading agricultural export.

Tin
and petroleum are the two main mineral resources that are of major
significance in the Malaysian economy. Malaysia was once the world's
largest producer of tin until the collapse of the tin market in the
early 1980s. In the 19th and 20th Century, tin played a predominant role
in the Malaysian economy. It was only in 1972 that petroleum and natural
gas took over from tin as the mainstay of the mining sector. Meanwhile,
the contribution by tin has declined. Petroleum and natural gas which
were discovered in oilfields offshore from Sabah, Sarawak and Terengganu
have contributed much to the Malaysian economy particularly in those
three states. Other minerals of some importance or significance include
copper, gold, bauxite, iron-ore and coal together with industrial
minerals like clay, kaolin, silica, limestone, barite, phosphates and
dimension stones such as granite as well as marble blocks and slabs.
Small quantities of gold are
produced.

The
government predicts that at current production rates Malaysia will be
able to produce oil for 18 years and gas for 35 years. In 2004 Malaysia
is ranked 24th in terms of world oil reserves and 13th for gas. 56% of
the oil reserves exist in the Peninsula while 19% exist in East
Malaysia. The government collects oil royalties of which 5% are passed
to the states and the rest retained by the federal government.

Transport
& Communications

Malaysia
has extensive railroads that connect all major cities and town on the
peninsular and east Malaysia itself. There is a train service in West
Malaysia run by KTM and several LRTs in Kuala Lumpur such as the Ampang
Line, Sri Petaling Line (formerly called STAR LRT), Kelana Jaya Line
(formerly called PUTRA LRT). The North-South Expressway basically spans
from the northern tip of Bukit Kayu Hitam and Johor Baru in the south,
which also connects roads into Thailand and Singapore. There are sea
ports in Tanjong Kidurong, Kota Kinabalu, Kuching, Pasir Gudang, Penang,
Port Kelang, Sandakan and Tawau. There are also world class airports
that provide international and domestic destinations.

Roads
in the East Malaysia and the eastern coast of West Malaysia are still
relatively undeveloped. Those are highly curved roads passing through
mountainous regions and many are still unsealed, gravel roads. This has
resulted in the continued use of rivers as the main mode of
transportation for interior residents.

Malaysia
is also the home of the first low-cost carrier in the region, Air
Asia. It retains Kuala Lumpur as its hub and maintains flights
around Southeast Asia and now China as well.

The
intercity telecommunication service is provided on Peninsular Malaysia
mainly by microwave radio relay. International telecommunications are
provided through submarine cables and satellite.

In
December 2004, Energy, Water and Communications Minister Datuk Seri Dr
Lim Keng Yaik reported that only 0.85 percent or 218,004 people in
Malaysia used broadband services. However these values are based on
subscriber number, whilst household percentage can reflect the situation
more accurately. This represented an increase from 0.45% in three
quarters. He also stated that the government targeted usage of 5% by
2006 and doubling to 10% by 2008. Lim Keng Yaik had urged local
telecommunication companies and service provider to open up the last
mile and lower prices to benefit the users. One of the largest and most
significant telecommunication companies of choice in Malaysia is Telekom
Malaysia Berhad (TM), providing products and services from fixed line,
mobile to Internet Service Provider.

Healthcare

Malaysian
society places importance on the expansion and development of
healthcare, putting 5% of the government social sector development
budget into public healthcare — an increase of more than 47% over the
previous figure. This has meant an overall increase of more than RM 2
billion. With a rising and aging population, the Government wishes to
improve in many areas including the refurbishment of existing hospitals,
building and equipping new hospitals, expansion of the number of
polyclinics, and improvements in training and expansion of telehealth.
Over the last couple of years they have increased their efforts to
overhaul the systems and attract more foreign investment.

The
Malaysian healthcare system requires doctors to perform a compulsory 3
years service with public hospitals to ensure the manpower of these
hospitals is maintained. Recently foreign doctors have also been
encouraged to take up employment here. There is still, however, a
compound shortage of medical workforce, especially that of highly
trained specialists resulting in certain medical care and treatment only
available in large cities. Recent efforts to bring many facilities to
other towns have been hampered by lack of expertise to run the available
equipment made ready by investments.

There
are currently 114 government hospitals and healthcare centres with a
total of 28,163 beds. There are also seven special medical institutions
(including psychiatric institutions) with a total of 6,292 beds. As for
private hospitals, there are 225 of them (including maternity and
nursing homes) in Malaysia, and they provide 9,498 beds. The majority
are in urban areas and, unlike many of the public hospitals, are
equipped with the latest diagnostic and imaging facilities. Private
hospitals have not generally been seen as an ideal investment - it has
often taken up to 10 years before companies have seen any profits.
However, the situation has now changed and companies are now looking
into this area again, particularly in view of the increasing interest by
foreigners in coming to Malaysia for medical care.

Education

Malaysian
children begin schooling from the age of 3, 4 or 5 in kindergarten. Year
One begins the year a child turns 7. There is an exam taken when leaving
Primary school, called 'Ujian Penilaian Sekolah Rendah', or UPSR
(Primary School Assessment Examination) which is taken by all Year Six
students before going into secondary schools. The purpose of this
examination is to assess the quality of the primary education in
Malaysia. An exam called Penilaian Tahap Satu (PTS; First Level
Assessment) was used to measure the ability of bright students, and to
allow them to move from Year 3 to 5. This exam has since been removed.

Secondary
education lasts five years. At the end of the third year or Form Three,
students must sit for the 'Penilaian Menengah Rendah' (PMR; Lower
Secondary Assessment), to guide them on what subjects to take in the
next year. The combination of subjects available to Form 4 students vary
from one school to another. In the last year (Form 5), students sit for
'Sijil Pelajaran Malaysia', or SPM (Malaysian Certificate of Education;
equivalent to the British Ordinary or 'O' levels, now referred to as
GCSEs).

Some
Chinese choose to study in Independent High School, where most subjects
are taught in Chinese. Independent high school takes 6 years to
complete. Instead of sitting for PMR or SPM, student will sit for UEC in
Junior Middle 3 (Form 3) and Senior Middle 3 (Form 6). Some independent
high schools teach in Malay and Chinese, so that the students can sit
for PMR, SPM and UEC.

Students
wishing to enter university must complete 2 more years of secondary
schooling. They must take up either the school based Form Six and sit
for Sijil Tinggi Pelajaran Malaysia', or STPM (Malaysia Higher
Certificate of Education; equivalent to the British Advanced or 'A'
levels), matriculation (1 year only), or other pre-university courses
before they may apply for entry into local universities. Independent
High School students can enter some of the universities using their UEC
result.

Students
can opt to go to private colleges after secondary studies. Most colleges
have education links with overseas universities especially in the United
States, the United Kingdom and Australia. Malaysian students abroad
study mostly in the UK, United States, Australia, Singapore, Japan,
Canada and New Zealand.

Until
recently, all subjects except foreign languages (English, Mandarin and
Tamil) were taught in Malay. The result was that while many Malaysian
students were proficient with the Malay language, they later struggled
with English based tertiary education, especially in overseas
universities and colleges.

Currently
Mathematics and Science subjects such as Biology, Physics, Chemistry are
taught in English. The reasoning was that students would no longer be
hindered by the language barrier during their tertiary education in
fields such as medicine and engineering. All other subjects are taught
in Malay.

In
addition to the National Curriculum, Malaysia has many international
schools. International schools offer students the opportunity to study
the curriculum of another country. These schools mainly cater for the
growing expatriate population in the country. International schools
include - Australian International School, Malaysia (Australian
curriculum), The Alice Smith School (British curriculum), The Garden
International School (British curriculum), The International School of
Kuala Lumpur (International Baccalaureate and American curriculum), The
Japanese School of Kuala Lumpur (Japanese curriculum),The International
School of Penang(International Baccalaureate and British curruculum) Lycée
Français de Kuala Lumpur (French curriculum) amongst others.

Demographics

Malaysia's
population is comprised of many ethnic groups, with the politically
dominant Malays making up the majority. By constitutional definition,
all Malays are Muslim. About a quarter of the population are Chinese,
who have historically played an important role in trade and business.
Malaysians of Indian descent comprise about 10% of the population and
include Hindus, Muslims, Sikhs, Christians, and Buddhists. About 90% of
the Indian community is Tamil but various other groups are represented,
including Malayalis, Punjabis and Telugus.

Non-Malay
indigenous groups make up more than half of the state of Sarawak's
population, constitute about 66% of Sabah's population, and also exist
in much smaller numbers on the Peninsula, where they are collectively
called Orang Asli. The non-Malay indigenous population is divided into
dozens of ethnic groups, but they share some general cultural
similarities. Other Malaysians also include those of, inter alia,
European, Middle Eastern, Cambodian, and Vietnamese descent. Europeans
and Eurasians include British who colonized and settled in Malaysia and
some Portuguese, and most of the Middle Easterners are Arabs. A small
number of Kampucheans and Vietnamese settled in Malaysia as Vietnam War
refugees. Population distribution is uneven, with some 20 million
residents concentrated on the Malay Peninsula.

May
13, 1969 saw an incident of civil unrest which was then thought to be
largely due to the socio-economic imbalance of the country along racial
lines, though in retrospect it may have been more motivated by political
firebrands in both governing and opposition parties, as the violence
involved only the areas in and around the capital, with much of the
country remaining at peace. This incident led to the adoption of the New
Economic Policy as a two-pronged approach to address racial and economic
inequality and to eradicate poverty in the country.

Due
to the rise in labour intensive industries, Malaysia has 10 to 20
percent foreign workers with the uncertainty due in part to the large
number of illegal workers; there are a million legal foreign workers and
perhaps another million unauthorized foreigners. The state of Sabah
alone has nearly 25% of its 3 million population listed as illegal
foreign workers in the last census. However, this figure of 25% is
thought to be less than half the figure speculated by NGOs. Unauthorized
foreigners are subject to RM10,000 fines and two-year prison terms,
while Malaysian employers face up to a year in jail and a fine of up to
RM50,000 for each illegal worker hired, with those hiring more than five
also liable to caning. Caning is a standard punishment for more than 40
crimes in Malaysia, ranging from sexual abuse to drug use. Administered
with a thick rattan stick, it splits the skin and leaves scars.

Some
380,000 unauthorized foreigners left during an "amnesty" that
began in Fall 2004 and was extended several times. During amnesties,
unauthorized foreigners can leave without paying fines for staying
illegally in the country. On March 1, 2005, some 300,000 policemen as
well as the 560,000-strong Peoples Volunteer Corp began searching for
the remaining unauthorized foreigners under Operation Tegas; the
volunteers receive RM100 for each foreigner arrested. Source: Migration
News, April 2005 Volume 12 Number 2